Local governments weather state funding cuts

King Road, north of Goosepond Road, is paved Friday morning. On Nov. 4, Newark officials are asking local voters to approve a 0.15 percentage point increase in the city income tax rate to raise $1.6 million annually for road, bridge and sidewalk work.
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NEWARK – After state money began slowing its downward flow in the first half of Gov. John Kasich's administration, local city, township and county government officials said they continued to make ends meet through "belt-tightening, working lean, thinking creatively and finding new funding sources."

Translation: Cutting back on staffing and services, eliminating duplication, finding new efficiencies and raising fees and taxes.

Kasich came into office in January 2011, after the lowest points of the Great Recession, when governmental entities across the state already had trimmed staffs, costs and services to offset stagnant revenue, high unemployment and still-cool real estate sales. Balancing a two-year state budget included drastically cutting state local government funds and eliminating the state's estate tax.

Now, Licking County governments continue to control costs, re-evaluate services and try to raise revenue.

Last year, the Licking County commissioners increased the county's permissive license plate tax and real estate conveyance fee to help pay for road and bridge improvements and economic development. Area townships have passed road and fire levies to provide services within their boundaries. On Nov. 4, Newark officials are asking local voters to approve a 0.15 percentage point increase in the city income tax rate to raise $1.6 million annually for road, bridge and sidewalk work.

Effect on Newark

Newark Mayor Jeff Hall said the old model of paying state taxes with the presumption of that money returning to the local community may be outdated. Raising funds locally allows for local control, he said.

Hall said losing roughly $1.1 million annually in local government funds from the state has contributed to the call for raising the city income tax.

"We have less funding. As a result, we have to find more avenues to provide funding for services," he said.

City Auditor Stephen Johnson said Newark has lost roughly $2.1 million in state funding annually since 2010: $1.1 million in local government funds, an average of roughly $800,000 in the now-defunct estate tax and $225,000 in personal property tax.

That money used to go into the city's general fund, Hall said, which helped provide capital improvement contributions to city roadwork. Less money contributed to tighter staffing, including eliminating a third shift at the street department, and seeking technological ways to improve services, he said.

At the county level, a $1.4 million loss in local government fund disbursements — from $3.2 million in 2010 to $1.8 million in 2013 — has been offset by strong sales tax collections. The sales tax brought in $27.8 million in 2013, up $4.4 million from the $23.4 million earned in 2010, according to County Commissioner Tim Bubb. Over that same period, property tax earnings remained flat, at $8 million annually.

"So what has happened is our revenue is up, but not nearly what it would have been had the local government fund stayed the same," Bubb said.

During the Great Recession, the commissioners held payroll costs steady by cutting back staffing, eliminating raises, abolishing some jobs and offering early retirement, Bubb said. They also deferred paving, bridgework, roof replacement and vehicle purchases.

Cuts in local government funds slowed the county's recovery from the recession, Bubb said. The commissioners had increased the sales tax from 6.5 cents on the dollar to 7 cents starting in 2006, which helped the county weather the downturn, he said.

"Licking County stayed above water. It would not have otherwise," County Commissioner Doug Smith said.

County Auditor Mike Smith said Licking County has been blessed by sales tax collections and casino revenue — $853,084 in 2013 and $1 million this year — which helped make up for the cuts, but added that local cities, villages and townships have not been as lucky.

Township troubles

Mark Van Buren, a Harrison Township trustee and president of the Licking County Township Association, said the loss of local government funds hurts the smallest townships most. His township has levies in place for roads and bridges, he said. That makes it better able to work through losing about $13,000 annually in local government funds.

"The smaller townships that do not have the tax base, they're the ones who are getting hit hard," he said.

Small townships may have lost roughly $10,000 annually, he said, but that effect is large.

"These small townships, that's a lot of gravel, and that's a lot of fuel they're losing," he said.

The elimination of the estate tax also has harmed townships, Van Buren said. Although he does not support what he called "the death tax," which he considers double taxation, he said his township lost an average of $65,000 annually through its elimination.

"I don't like it and I'm glad they repealed it, but they should have somehow replaced it," he said.

Franklin Township Fiscal Officer Molly Long said a $13,000 cut in local government money has caused her township to spread costs among several funds to avoid depleting the general fund. For example, electricity and insurance costs for appropriate facilities or departments are now partly funded through road or fire levy money, rather than exclusively through the general fund, as in the past.

Over in Eden Township, leaders have cut back on general fund spending and now see the road and bridge and fire service funds exceeding what once was the township's largest funding source, Fiscal Officer Steve Little said. While township voters have a good record for passing levies when needed, he said, a 5-mill permanent road levy passed by just 22 votes in November.